checklist public issue - sme segment

8/6/2019 Checklist Public Issue - SME Segment

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VC CORPORATE ADVISORS PVT. LTD.For internal circulation only Confidential

INITIAL DUE DILIGENCE CHECK LISTINITIAL DUE DILIGENCE CHECK LIST

FOR THEFOR THE

IPOIPO

VC Corporate Advisors Pvt. Ltd.31, Ganesh Chandra Avenue,2nd Floor Suite no. 2C,

Kolkata - 700 013.

Ph : 033 - 2225 3940 / 3941 / 4116

Fax: 033 - 2225 3941

1CHECKLIST FOR THE INITIAL PUBLIC OFFERING


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INITIAL REGULATORY DUE DILIGENCE LIST

TABLE OF CONTENTS

A. INITIAL REGULATORY DUE DILIGENCE CHECKLIST .................................. 3Section I General Information .................................................................... 3

Section II Capital Structure ........................................................................ 5Section III History ..................................................................................... 7

Section IV Management ............................................................................. 8Section V Subsidiaries, Group And Associate Companies & Equity Investments 9

Section VI Business ................................................................................. 10Section VII - Promoters ............................................................................. 12

Section VIII- Information on Financial Performance ....................................... 12Section IX - Management Discussion and Analysis ......................................... 14

Section X- General information .................................................................... 14Section XI- Consent Letters ........................................................................ 15

Section XII- SEBI Certificates ...................................................................... 15

Section XIII Other certificates ................................................................... 15B. PRELIMINARY LIST OF INFORMATION REQUIRED ABOUT THE BUSINESS

OF THE COMPANY ....................................................................................... 15Corporate profile/ history of the Company .................................................... 15

Business of the Company ............................................................................ 15

Industry Overview - .................................................................................. 17



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A. INITIAL REGULATORY DUE DILIGENCE CHECKLIST

Document type

SECTION I GENERAL INFORMATION

1. Consent/ Resolution from shareholders for fresh issue of equity. Resolution

2. Power of Attorney from the Directors of the company for signing the RHP/

Prospectus while filing with SEBI/the Registrar of Companies (RoC).

Document(s)

3. Minutes of Board and general body meetings of the company for the last three

years.

Document(s)

4. Review of minutes of all stockholders/shareholders meetings, stock books,

stock ledgers and other records of stock issuances of the Company.

Documents

5. Review of internal audit reports for the last 5 years. Documents

6. Copies of all statutory RBI/ GoI/ FIPB/ various GoI agencies clearances and

approvals received and copies of applications made if approval(s) awaited

e.g. SIA registration, environmental clearance, approvals required for utilities,emission norms, approvals for foreign investment, approvals for export etc.

Document(s)

7. List of approvals that are required to undertake and continue the business e.g. permission for electricity, water and other utilities from the relevant

authorities

Copy of all approvals/consents received from municipal/localauthorities.

Copy of any show cause notice received from municipal/local

authorities.

Copy of tax exemption approval that the company has availed of,

including exemption relating to entertainment tax.

Certificate &Document(s)

8. Labour compliances

List of all labour compliances maintained by the company.

Latest filings for provident fund, gratuity

Labour Registers ESI, Provident Fund, Accidents Register.

Registration under the Contract Labour (Regulation and Abolition) Act,

1970.

Any group insurance policies for gratuity, accident etc.

Any notices from any labour or statutory authority.

List of any collective bargaining agreements.

Number of employee unions, are these recognized or unrecognized

unions, are they registered or unregistered.

Any payouts made to any workmen as compensation for any accidentsetc.

Copy of the fatal accidents register.

9. Confirmation that the company, its directors, any of the companys associatesof group companies, and companies with which the directors of issuer are

associated as directors or promoters, has not been prohibited from accessing

the capital market under any order or directions passed by SEBI. If the

promoter is a body corporate, then confirm and disclose that none of the

directors or the person(s) in control of the body corporate has been prohibited

from accessing the capital market under any order or direction passed by

SEBI.

Certificate

10. Confirmation that neither the company, nor its promoters or their relatives or

promoter group companies have been declared by RBI as willful defaulters. If

declared as a willful defaulter, the reasons thereof with case history.

Certificate

11. Penalties, if any imposed by SEBI or any other regulatory body in or abroad

to be disclosed. Else a negative confirmation.

Certificate

12. Address of the registered office of the company, registration number of the

company along with the address of RoC where the company is registered.

MoA/AoA and Mgmt

confirmation



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Document type

13. Name, address, telephone number, fax number and e-mail address of the

Company Secretary.

Mgmt confirmation

14. Name, address, telephone number, fax number and e-mail address of the

Auditors to the Company.

Mgmt confirmation

15. Name, address, telephone number, fax number, website address, e-mail

address and contact person of the Registrar to the Issue along with copy ofthe SEBI registration certificate.

Document(s)

16. Name, address, telephone number, fax number, website address, e-mail

address and contact person of the Market Makers to the Issue along with copy

of the SEBI registration certificate.

Document(s)

17. Name & address of the Compliance Officer of the Company with phone and

fax numbers and the e-mail address.

Resolution/

Certificate

18. Name, address, phone number, fax number and e-mail address of the of the

legal advisors to the Company.

Mgmt confirmation

19. Name, address, phone number, fax number and e-mail address of the of the

Bankers to the Company.

Mgmt confirmation

20. No default certificate from bankers / lenders.

21. NOC from bankers / lenders as per existing terms of agreements.

22. Name, address, telephone number, fax number, contact person, websiteaddress and e-mail address of the Underwriters and Escrow Collection Banks

(along with copy of the SEBI registration certificate of the Bankers and any

correspondent bank).

Mgmt confirmation

23. Details of all credit ratings received by the Company during the previous

three years (including copies of the letters received from the rating agency(s))giving the name of the rating agency(s), credit rating, borrowing programme

etc.

Document(s)

24. Date and place of original incorporation of the company and any changes

thereafter in the name and registered office.

Copies of Certificate of

Incorporation andchange of name/

registered office (s)

25. If there is a change in the name of the company at any time during the last 3years, state reasons for change and whether and when the Objects clause of

Memorandum of Association was amended to carry on activities as reflected

by the new name.

Document(s)

26. Certificate regarding utilisation of issue proceeds. Certificate

27. Tripartite Agreement between the Issuer, Registrar and Depositories (NSDL

& CDSL) to be executed by the Registrar.

Document(s)

28. Recent analyses of the Company prepared by investment bankers, engineers,

management consultants, accountants, rating agencies or others, including

marketing studies, credit reports and other types of reports, financial or

otherwise.

Document(s)

29. Details of any branch, agency, place of business or any permanent

establishment inside and outside, including address, brief description of

business and details of the personnel involved.30. Review of any report, notice or correspondence relating to any violation or

infringement by the Company of any Indian or other governmental regulation.

31. Review of compliance reports filed and significant correspondence with any

regulatory agency.

32. Review of all governmental permits, consents and regulatory approvals of theCompany.

33. List of and information relating to all material laws affecting operations of theCompany.

34. Review of copies of the approvals from the Secretariat for Industrial



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Document type

Assistance/Foreign Investment Promotion Board (SIA/FIPB) and the

Reserve Bank of (RBI) required by the Company or its shareholders for

any direct or indirect foreign investment or technical collaboration in the

Company, or copies of any industrial license obtained under Schedule I of the

Industries Regulation Development Act, 1951, if any.

35. Review of any reports, notices or correspondence to the Company regardingforeign payments or compliance with any countrys governmental regulations

or currency requirements.

36. Review of any other agreements executed by the Company with the Indian

government, or governmental entity, whether at the central, state ormunicipal/local level.

37. Other than those listed above, review of all reports filed with, and significant

correspondence sent to, any government regulatory agency, in or abroad, by

the Company.

38. Review of copies of all valid powers of attorney granted by the Company.

SECTION II CAPITAL STRUCTURE

The information in the capital structure should be as on the date of SEBI filing

1. Authorised, Issued, Subscribed and paid up capital Certificate Number of instruments

Face value

2. Size of the present issue in terms of the number of instruments and face

value

Certificate

Promoters contribution

Firm allotment/ reservation

i) Names of group companies in case reservation made to theshareholders of the group companies.

ii) Net offer to the public

3. Paid up capital

After Issue (based on issue structure)

After conversion of outstanding vested ESOPs/ securities, as applicable

4. Share premium account

Before the issue Document(s)/

Certificate

After the issue

5. Details of any outstanding financial instrument(s) or right entitling anyone to

receive equity shares after the issue.

Certificate

6. Details of change in face value/ subdivision/ split of shares and the Board and

EGM resolution authorizing such action.

Document(s)

7. Details of any bonus/ rights issue

The Board and EGM resolution authorizing such action Document(s)

RBI/ FIPB approval required if the rights/ bonus issue is made to an

NRI/ OCB/ Foreign collaborator

Document(s)

8. Details of the existing subscribed and allotted equity shares including that ofpromoter and promoter group:

Certificate

Date of allotment

No. of shares

Face value

Price/ consideration

Reason for allotment (e.g. subscribers to the memorandum, bonus,rights, amalgamation/ merger/ swap)

Cumulative Share premium



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Document type

9. Disclose the names of the promoters, promoter group, their pre and post issue

holdings, contribution towards promoters contribution and details of lock in

of their shares on a LIFO basis.

Certificate

10. Details of shares issued for consideration other than cash stating the date of

issue, persons to whom issued, price, reasons for the issue and whether any

benefits have accrued to the company out of the issue.

Certificate

11. Names and shareholding of the top ten shareholders of the Company Certificate

Two years prior to SEBI/ RoC filing

10 days prior to SEBI/ RoC filing

SEBI/ RoC filing

12. Current shareholding pattern and the post issue shareholding pattern. Certificate

Promoter Group

Directors of the promoters, if the promoter is a corporate

NRI/ OCB/ FII

Others

Total number of members of the Company

13. If the promoter is a corporate, the names of natural persons who are in control

(holding 10% or more of voting rights) or who are on the Board of anycompany which is a part of the promoter group.

Mgmt confirmation &

Document(s)

14. Promoters contribution and lock-in Certificate

Individual shareholding

Date of allotment/ date of making fully paid/ date of acquisition

Consideration

Nature of issue (bonus, rights etc.)

Face value and issue price of securities

Percentage of promoters contribution to the total issued capital

Date to which securities are locked-in

15. Promoters and other shareholders to give NOC to the Company for lock-in of

their shareholding, as per SEBI guidelines.

Certificate

16. If the locked-in shares have been pledged, then the details including name of

pledgee, facilities availed and terms and conditions of the pledge.

Document(s)

17. Details of additional lock in of shares, if any. Certificate

18. Details of transactions in the shares of the issuer company by the Promoter

Group and the Directors of the promoting companies

Document(s)/

Certificate

Transferor

Transferee

Maximum and minimum price of the transaction

Date of the transaction

19. Details of all buy-back, stand by and similar arrangements for purchase of

securities by the promoters, directors and lead managers, if any.

Document(s)

20. Details of bridge loans, if any. Document(s)

21. Confirmation that the issuer shall not make any further issue of capital

whether by way of issue of bonus shares, preferential allotment, rights issueor public issue or in any other manner, during the period commencing from

SEBI filing till listing.

Certificate

22. Disclose as to the proposal, intention, negotiations, consideration of the issuer

to alter the capital structure by way of split/ consolidation of the

denomination of the shares, or issue of shares on a preferential basis or issue

of bonus or rights or further public issue of shares or any other securities,within a period of 6 months from the date of opening the present issue.

Certificate

23. Details of the ESOP scheme, if any. Document(s)



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Document type

24. Review of copies of Register of Members/ Transfer of Shares, Register of

Inter Corporate Loans, Register of Charges, Register of Contracts, Register of

Directors, the Register of Investments and any other Register required to be

maintained by the Company.

SECTION III HISTORY1. History of the Company including

Date of Incorporation Copy of Certificate

Date of Commencement of Business Copy of Certificate

Date of conversion of private limited company to public limited

company, as applicable, dates on which names have been changed, if

applicable, reasons for change of name, changes in registered offices of

the company and reasons therefore

Copy of Certificate,

Document(s),

Certificate

Dates on which the Memorandum of Association of the company have

been amended citing the details of amendment

Document(s)

2. Main objects of the Company Document(s)

3. Trace the major events in the history of the company including Mgmt confirmation/

Document(s)

Corporate profile of the company regarding its history, description of theactivities, services, products, market of each segment, growth of the

company, standing of the company and/ or its products and its

management, the major suppliers and customers of the company,

environmental issues if any.

The company's performance, standing with reference to the prominentcompetitors with reference to segment [geographical, type of customers,

etc.]

Technology, market, managerial competence and capacity built-up

Capacity/ facility creation, location, marketing competition, details ofpast projects, time and cost overrun etc.

Raising of capital in form of equity or debt, details of default and

reschedulements, if any

Injunction/ restraining order, if any towards the company

Details of any restructuring

Complete details of acquisitions of business/ undertakings/ mergers/

amalgamation/ revaluation of assets. Provide copies of

merger/amalgamation scheme relating to merger of the erstwhile

subsidiaries into the Company, and other relevant documents in that

regard including valuation report and legal opinion.

Changes in the activities in the last 5 years of the issuer which have had a

material impact on the profit/loss of the company

4. Details of litigations and defaults as per certificate. Company to provide with

a list of all litigations, show cause notices or threatened notice or litigation.

Company should ensure that back up documentation and litigation files are

available for the same.

Certificate

5. A description of any and all strikes, lockouts, slowdowns and other labordisruptions at any of the Company's or any subsidiary's facilities and any

claim of unfair labor practices or petitions filed with federal or stategovernmental authorities with respect to workers at the Company's or any

subsidiary's facilities.

Document(s) & Mgmtconfirmation



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Document type

SECTION IV MANAGEMENT

1. Board of Directors

Name, age, fathers name, occupation, address (as submitted to the

RoC) of the Directors1Document(s)

Other directorships and the nominee capacity of the directors Certificate from eachDirector

Changes in the directors in the three years preceding the date of filing

the offer document: dates of appointment, resignation and reasons for

resignation- certificate required

Mgmt confirmation

Board resolution/ contract for the appointment and the remuneration of

the managing director and other directors

Document(s) &

Resolution

Interests of Directors, their borrowing powers and qualification shares Mgmt confirmation &

Document(s)

Litigation/ defaults etc as per certificate. Certificate

2. Key managerial personnel:

Profiles of key managerial personnel including name, date of joining,

qualification, details of previous employment, experience in the line of

business, key strengths , remuneration paid in last one year etc.

Mgmt confirmation and

employees

confirmation

Confirmation that the key management personnel are permanent

employees

Certificate

Changes in the key managerial personnel in the past one year: dates of

appointment, resignation and reasons for resignation

Certificate

3. Organisation structure with names, designations, functions and

responsibility

4. Corporate Governance Composition of Board, Audit committee, Investors

grievances committee, etc.

Document(s), Mgmt

confirmation

5. The following information shall be disclosed with respect to the company's

directors and key managerial personnel:

Name, business experience, functions and areas of experience in

the company. The nature of any family relationship between any of the

persons named under this head.

Any arrangement or understanding with major shareholders,

customers, suppliers or others, pursuant to which any person referred to

in this head, was selected as a director or member of senior management.

During the last FY, the amount of compensation paid, and

benefits in kind granted, to persons mentioned under this head, by the

company for services in all capacities to the company. Disclosure of

compensation should be given on an individual basis. The disclosure

should also covers contingent or deferred compensation accrued for the

year, even if the compensation is payable at a later date.

If any portion of the compensation was paid pursuant to a bonus

or profit-sharing plan, provide a brief description of the plan and thebasis upon which such persons participate in the plan.

With respect to the persons listed under this head, disclose as to

their share ownership in the company

The following information shall be disclosed with respect to, the

company's directors.

Date of expiration of the current term of office.

Details of directors' service contracts with the company

Mgmt confirmation,

Document(s) &

Certificate

1Form 29 & 32 which are filed with the RoC



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Document type

providing for benefits upon termination of employment, or an appropriate

negative statement.

Details relating to the company's audit committee and

remuneration committee, including the names of committee members and

a summary of the terms of reference under which the committee operates.

6. Documents providing for any bonus, retirement, profit sharing, incentivecompensation, welfare and other employee benefit plans or agreements of the

Company.

Document(s)

7. Review of copies of all agreements or arrangements restricting the transfer of

shares, or relating to the management, ownership or control of the Company,

and any other agreements which define or limit the rights of the shareholdersof the Company, including any restrictions upon voting rights or upon the

declaration or payment of any dividends or relating to the issuance of

additional share capital

8. Review of full particulars of any pension plan, pension arrangement, or

proposed pension scheme, covenant or life assurance schemes of the

Company. Details on compliance of the Provident Fund and Miscellaneous

Provisions Act, maintaining of the registers prescribed thereunder and details

of contributions and employees covered thereunder. Details of any otherProvident Fund scheme or Trust. Details of availing any infancy benefits

under Provident Fund and Bonus laws.

9. Details of bonus payments and registers required to be maintained pursuant to

the Payment of Bonus Act. Details of compliance with Payment of Gratuity

Act or other Gratuity Fund Scheme and any other Employee Welfare

Schemes in existence.

SECTION V SUBSIDIARIES, GROUP AND ASSOCIATE COMPANIES & EQUITY

INVESTMENTS

1. Define promoter group Legal Certificate

2. Group and associate companies Document(s)

Date of incorporation

Shareholding pattern Board of Directors

Audited accounts for the last 3 years, along with any significant notes to

accounts

Details of litigations and defaults as per certificate. Certificate

Information regarding companies which have become BIFR companies

or are under winding up or have negative net worth

Mgmt confirmation/

Document(s)

If listed, Document(s)/ Mgmt

confirmation

i. Highest and lowest market price during the preceding 6

months, current market price and current market capitalization

ii. In case the company has made a rights or a public issue, the

following details regarding the last issue: year of issue, type of issue,issue amount, date of closure of issue, date of completion of dispatch

of delivery of security certificates, issue price of the security, object

of the issue, rate of dividend paid, date of completion of the project,

where the object was financing of a project and particulars of changes

in the capital structure

iii. Promise v/s performance of all the group companies who have

made an issue during the last 3 years, or the last issue made by such

group companies, including cost and progress of implementation of



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Document type

the project in comparison with the cost and progress of

implementation given in the Prospectus/ Letter of Offer.

iv. Details of investor complaints which have been received,

resolved and which are pending resolution

v. Investor grievance redressal system including the normal time

taken to redress various types of investor complaints3. List of ALL VENTURES OF THE PROMOTERS (sole proprietorship, Firm,

private company, limited company, listed company), giving activities

undertaken, in brief. If any of these entities had faced/is facing any litigations/

defaults/ overdues OR labour problems/ closure etc., these may be mentioned

under this para. The list to include all private/ listed companies of the issuer

irrespective of whether they are under the same management as per Section

370(1B) of the Companies Act

Certificate

4. In case of common pursuits among the group companies and the issuer

Company, details of any conflict of interest to be given, along with related

party transactions and their financial implication on the issuer Company. Ifthe promoters/ directors are involved one or more ventures in the same line of

business as the issuer Company, potential conflict of interest to be given

Mgmt confirmation &

Certificate from

Auditors reg. Relatedparty transactions

5. Details of promoter company/ group companies etc. in securities relatedbusiness Certificate

6. Details of any investment in any other company, partnership, association or

any other person, including copies or details of any agreements/ arrangementswith other investors

7. A schedule with the names of all companies that the Company controls solelythrough its right to appoint an additional seat on the board of directors.

SECTION VI BUSINESS

1. Facilities

Location of the facilities Document(s)

Technology, process, etc. Mgmt confirmation/

Document(s)

Confirmation that land acquired by the company is free from allencumbrances and has a clear title

Certificate & Mgmtconfirmation/Document(s)

Details of municipal tax and local tax compliance Document(s)

All significant leases of real property and all leases of any substantial

amount of personal property to which the Company is a party, either aslessor or lessee

Document(s) & Mgmt

confirmation

2. Nature of products, consumers and end users, including dependence on

customers, suppliers, dealers etc (in or abroad)

Mgmt confirmation

3. RM supply agreements / arrangements

4. Seasonality of the business Mgmt confirmation

5. Details of the market including details of competition, past trends and

future prospects

Mgmt confirmation &

Document(s)

6. Manpower: Details of the recruitment strategy, training programs andretention strategy

Mgmt confirmation

7. Marketing strategy Mgmt confirmation

Approach to marketing and marketing set up

Brand names/ service marks owned by the Company (and whether they

are registered in the name of the Company)

Document(s)

8. Collaborations/ alliances: Document(s)

Details of collaboration, performance guarantee or assistance in

marketing by collaborators.



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Document type

21. Review of all significant documents relating to major acquisitions or

dispositions, or, proposed acquisitions or dispositions, by the Company.

22. Details of any investigation by, or correspondence with, any monopoly

and/ or restrictive trade practices commission of office, including the office of

The Monopolies and Restrictive Trade Practices Commission under or in

connection with the Monopolies and Restrictive Trade Practices Act, 1969, asamended.

23. Details of any agreement or arrangement (or any judgment or ruling)

which restricts the Companys ability to compete anywhere in the world and

of any notification or registration or notification under the relevant domesticlegislation.

24. Details of and copies of documents relating to any patent, trade or service

mark or registered design, or any copyright, know-how or other intellectual

property of which the Company is the owner, licensee or user.

25. Details of any infringement or alleged infringement by third parties of

any intellectual property rights of the Company.

26. Details of any intellectual property rights owned by third parties the use

or exploitation of which is necessary or desirable for the business of the

Company27. Details of any circumstances where the benefit, or the right of use, of any

of the above intellectual property rights, licences or agreements may be lost

or affected adversely (including on a change of control).

28. Schedule of major suppliers and customers, giving annual amounts

purchased or sold.

29. Backlog and order records

30. Details of all insurance policies of the company. List to be provided with

details of amounts of the same and the coverage of the policy. Cover notes/

policy details should be kept available for review.

SECTION VII - PROMOTERS

1. Back ground of the promoters, their qualifications and experience Certificate &

Document(s)

Details of litigations and defaults as per certificate Certificate 26

Any other interest of the promoter in the company

2. In case the present promoters have acquired the controlling interest, state

details such as date of acquisition, terms of acquisition, consideration and

compliance with the provisions of the SEBI (Substantial Acquisition ofShares and Takeovers) Regulations, 1997 as applicable

3. If the Promoters/Directors have any other interest in the Issuer Company, thesame should be brought out briefly under this head also in addition to details

appearing elsewhere in the prospectus.

4. If the promoters have disassociated with any firm in the last 3 years then the

reasons for the disassociation together with the terms of such disassociation

Certificate

5. Details of outstanding litigations and defaults in case of companies with

which the promoters were associated in the past as per certificate

Certificate

6. Companies belonging to Promoter whose name has been struck off from theRegistrar of Companies

SECTION VIII- INFORMATIONON FINANCIAL PERFORMANCE

1. Documents to carry audited accounts for the last 5 years and the stub period

2. Auditors certificates considering ICAI accounting standards Auditors Certificate

Comfort letter(s) at the time of SEBI filing and RoC filings of

the RHP and Prospectus



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Document type

Certificate of Tax Benefits

Auditors Report (as per Schedule II requirement)

Adjusted P&L Account for the last 5 years and the stub period

Adjusted Statement of Assets and Liabilities, with Net worthshown separately, Revaluation reserves should be deducted for the last 5

years and the stub period Adjusted cash flow statement for the last 5 years and the stub

period

Significant Accounting Policies

Changes in Accounting Policies in the last five years

Notes to Accounts & qualifications to a/cs

Statement of adjusted accounting ratios

Statement of aggregated related party transaction as per

Accounting Standard 18

Statement of adjusted segmental information as per AccountingStandard 17

Statement of dividend paid for the last five years.

Tax Shelter Statement (SEBI format) Capitalization Statement (SEBI format)

Statement of Earning per share

Break up of Sundry Debtors (separately showing break up of

receivables from promoters/ promoter group/ group companies)

Aging Schedule of Sundry Debtors

Break up of Loans and Advances (separately showing loans/

advances to promoters/ promoter group/ group companies/companies in

which directors are interested)

Statement of adjusted Other Income

Statement of adjusted secured loan showing details of terms

and conditions Statement of adjusted unsecured loan (separately showing

loans/ advances taken from promoters/ promoter group/ group

companies/companies in which directors are interested)

Details of Investments (both quoted investments with current

market value and unquoted investments)

Relevant details of all the contingent liabilities

3. Outstanding due to small scale undertakings for more than 30 days

4. Cost per share to the promoters and book value per share. Certificate

5. Details of customer concentration (if the main customer(s) are foreign then

details of the impacts on the financials due to currency fluctuations need to

provided)

Mgmt confirmation/

Document(s)

6. Key Accounting ratios to be given as of the date of filing (to include anyalteration in the capital structure after the date of audit), including EPS, NAV

and RoNW and to be provided also in the post-diluted basis

Auditors Certificate

7. In case of change in standard denomination of shares, financial data,

comparison of financial ratios should be presented pre-split and post split, and

stock market data and capital structure should have adequate disclosures.

Auditors certificate

8. Brief terms and conditions of the term loans including re-schedulement,

prepayment, penalty, default, etc. be incorporated along with suitable risk

factor(s) for the negative developments. Company to provide a list of

Document(s)



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o What is current market size of each of the segments in which the Company is operating.

The data on each segment should be backed by relevant industry publications.

o The details of the major domestic and overseas players in each of the segment in which

the Company is operating.

o Key factor which determine the bargaining capability of the Company vis--vis other

players in the industry.

o What is the cost advantage the Company enjoys vis-a-vis other players in the segment. Cost Analysis

o Major elements of variable and fixed costs

o Strategies to compress cost structure

Investment planso Is the Company operating at optimum capacity? Can the company increase volumes

without incurring too much incremental expenditure?o Capex required for supporting expansion. Financing plan to support this capex.

o New business initiatives planned by the Company

o Plans to expand in overseas geographies

Inorganic Growth Plans

o Profile of the likely acquisitions / joint ventures if any.

Business Advantage

o Technology and business practices

o Major competitive advantages derived by the company

o Productivity achievements targets and plans to achieve them

o Quality policy and systems for ensuring quality

Competitive advantage

o Major competitive advantages derived by the company

o Achievements targets and plans to achieve them

o Quality policy and systems for ensuring quality

Marketing Advantage:

o Marketing structure and sales set up

o Segment wise positioning

o Pricing strategy

o Advertising and marketing strategy including Promotions, if anyo Policy of the company in attracting/drawing customers.

Organisation structureo What is the current organization structure?

o What are the HR; Training and recruitment policies?

o Who are the key people? What are their educational qualifications and work experience?

Please highlight who amongst these are secondees? What is plan to move to anindependent management structure?

o What is the total employee strength? What is the number of employees in each segment/

business area? What are the planned additions?

o What is the average cost per employee?

R&D

o Importance of R&D in the industry

o R&D setup and budgets

o Initiatives and key achievements

SWOT analysis as perceived by management

Other

o (Potential) competition to the Companys business

o Any stated dividend policy details of the same

o Highlight a few decisions that emphasize the independent nature of the Board?

o What is the current contracting strategy for equipment / manpower etc.?



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o Details of the ESOP structures?

o What are the commercial arrangements with the software

developers/corporates/publication houses

o Details of debt contracted so far (loan agreements) and changes to terms, if any

o What is the billing, receivables and payables cycle?

o Detailed financial model with assumptions etc.

o Details of break-up of revenue by customer and product segment in the past 2 years:volumes, price and usage. Historical (2 years) cost break-up by variable and fixed costs.

o Shareholders agreement

INDUSTRY OVERVIEW -

The industry section of the Red Herring Prospectus should be prepared to inform the investors of the major

industry parameters affecting profitability of the companies in the industry, prominently highlighting the

aspects that are positive for the company and making investors aware of possible risks to the company.

This should cover industry evolution and future outlook, including key demand drivers

[All industry data is required to be supported by copies of industry reports which can be quoted as sources

in the Red Herring Prospectus.]
